Low in place for a big bounce or one more wave lower and then higher …?
Sitting in the airport in Tokyo just going thru files and deleting, filing and trying to make sense of my computer … so many screen shots, charts, pictures, etc. etc. but I did come across this gem, which, of course, I had totally forgotten about …
Rates sure look like they want to tag 6% and are targeting the .382 retrace from 40 years ago.
Last Post on Interest Rates: https://bartscharts.com/2023/07/06/interest-rates-july-06-2023/
I’m going to post some charts – again – just so people realize the extent of the interest insanity that we are dealing with …
At the end of ZIRP (Zero Interest Rate Policy) we were – nominally – at a 5000 year low in interest rates:
I follow Mr. Armstrong – he’s my only follow. Here’s the link to the data: https://www.armstrongeconomics.com/markets-by-sector/interest-rates/source-for-the-history-of-interest-rates/
Now, with that in mind, we have now gone up the same amount in interest rates in 4 years compared to what it took, the last time, 20 years to do … let that sink in!
The below is interest rates since 1913 – LOG SCALE. Take note of the orange line … over 112 years interest rates have NEVER gone up this much and this time THEY DID IT IN A MERE 4 years – not 20+ like the last time.
Sure seems like they want to go to – at a minimum – the .382 below. Imagine what that will do to our multi trillion dollar debt payments and, just as importantly, emerging markets, Asia and Europe. Remember, the reserve currency is STILL the USD.
So, take a look at the chart above … if we have begun (who knows) a ‘new’ bull market in interest rates, certainly seems plausible that we will have 20%+ interest rates OR a global sovereign debt collapse and burn the entire thing down …
I’m still long TBT.
Bart
Bond complex coming into a key inflection point …
Well, I fully admit my mistakes on this blog. Yes, went long around 14 on TBT and now, wondering if “this was just a correction and we go back to ZIRP. ” Sure looks like TBT is about to fall off the proverbial cliff and w/ that we’ll get a rate cut and then bonds will go higher and blah blah. Good thing our interest payment on our debt isn’t crushing still ….hmmm, about that! 🙂
anyhoo … my goal has been to get into a position at what I ‘think’ (that might be the problem) and ride the entire WAVE. As you may or may not know I am a surfer and enjoy being on the water riding, what I call, echoes of the primordial big bang thru the medium of water and a surfboard. Wow … folks, you see, the water isn’t moving … it’s the PULSE of the ENERGY flowing thru the water.
so, we are close to judgement time and it’s going to close out on my head (been there done that) or have I picked the right line (you literally maneuver the surfboard to match a line that will encompass the FORM, PROPORTION and BALANCE (sound like Elliott Wave Theory?) of that wave so you can keep making sections and ride the wave up and down and up and down. It’s zen.
we can see the H+S neck line we are about to crack thru (or we should see them) and take note of the .618 price projection is precisely causing the support (hmmm – note, don’t forget, always know where the .618 price projection is) and then we go lower into a small unfilled gap on the .618 but finish a near perfect BUY pattern @23.30. Little lower is the .786 and then, well, perhaps this was an a-b-c correction and another low to be made.
Maybe I’ll just put my stop a little below the .786.
I’m no fundamentalist – fully admit it.
It just looks like way way back at the top I said this could be the top for a few decades as it sure looked like 5 waves UP from the 1982 low on bonds. So … one of these levels will hold – and start back up – which means rate increases over time.
Who knows …
now, objectively speaking, if we look at the 10 year interest rate, it really hasn’t budged that much has it? and, if we use Mr. Measured Move we can see that it does have some higher targets.
Here’s a look at interest rates
So, either way we look at it, we are coming to a very important inflection point according to the patterns.
Which way will they go?
B
For now, I see this as an A-B-C correction w/ a move down occurring which should be BOUGHT to take up into the mid 100’s – for now.
I say for now because I’m a little “stung” (not that bad but just “stunned” ) I didn’t see the size of the rally in equities. I admit it, I was too stuck into “another leg down” (which I wanted to BUY OBTW) but that “one more leg down” never came … and a parabolic blow off had occurred. Nailed the October low but … missed the move.
So, just like I feel comfortable stocks are setting up for a BIG MOVE down (now or soon’ish) I feel pretty good that the low we made was the end of a 5 count move. If not, then we finsihed a 3 down around 84 and we have another move down below 84. Who knows …
But, given that I am “correct” I have put realistic target up there because, in this current environment, the TLT could go all the way up to 180 and STILL be against the “trend” which – I believe started w/ the high back a couple years ago.
And that, for me, is the key … that was a huge thumping and, the ‘look and feel’, tells me this isn’t going to be ‘easy’ or ‘cut and dry’ – can you President Biden enjoying the FED “raising rates” during and election year? Or, certainly would love for him to “cut rates” and how in the world , seriously, is he going to do that …?
So, this was a GREAT run down in TLT -in which I played LONG TBT and still long and hold a position – but from a “time” perspective I just think we need more TIME so I’m looking to BUY TLT after I see what happens at 91.18.
The TLT trade at 84 https://bartscharts.com/2023/10/13/tlt-october-13-2023/ coincided to the day w/ Uranus moving 84 degrees helio. From an astrological perspective, degrees of movements of Uranus are important for bonds/fixed income – or so I am told. 😉 The chart appears heavy and certainly thought it would close below and keep rolling but .. it lived, for now. honestly, not too bullish on it but what do I know. But, that started to change when I went and took a peak at the 10 year interest rate chart – $TNX.
The bonds are in a complete route … that being said, I’m trying hard to not look at the fundamentals because 1/ I don’t understand them and 2/ I’m just a simple pattern guy.
We have confluent technical indications that the bond route “should” be coming to an end, for now. I know there is no justification for this from all the talking head pundits … but I’m just looking at the chart.
So, this is looking as the first “real” opportunity to stop this runaway train of rates … but, this train WILL GET GOING AGAIN as I’m counting this as the first wave completing/completed in a 5 wave sequence. (remember folks, wave 3 can’t be the shortest, so get ready. now that doesn’t mean it has to be long as wave 1, then it can’t be shorter than wave 5.) The characteristics of the 3rd wave usually mean that it will equal or exceed wave 1.
To put wave 1 in perspective from a percentage move it has just been a 1,483% rise in interest rates since the low. IT IS JUST GETTING STARTED.
If we blow thru this level – and, of course, why not – then it’s pretty conceivable that we could roll all the way up to the .382 from the 1981 high in interest rates. What do you know?
Last post on TLT: https://bartscharts.com/2023/10/13/tlt-october-13-2023/
Not out of the woods yet but we have a very nice BUY pattern setting up on the TLT hourly. For the wave 1 to be complete, this level needs to hold.
Last post on TLT: https://bartscharts.com/2023/08/12/tlt-august-12-2023/
Last post on bonds: https://bartscharts.com/2023/07/30/bonds-july-30-2023/
Well, rates are spiking and bond prices are falling like a stone. Yup … and to think, folks, this is just wave one down. As discussed about a month ago, the target for this ending wave down is now around 110 is and then, still, the zone lower in the 98-103ish …Who knows, if you think about it.
IF my count is correct, THEN this will be a wave 2 in a bear market in bonds that could last years …and, if the recent wave 2 / b wave in the equities market is any barometer I believe this bounce will be BIG because the narrative of “inflation is under control” and the “fed is easing” and blah blah will come out and EVERYONE will think, that’s it and back we go to tinsel town. BONK.
Just counting … that ain’t gonna happen. Might we get some rate cuts in the upcoming bounce? Sure … Might rates naturally drift back down and blah blah blah blah – absolutely. Folks, it might seem that all is GREAT again.
But, it’s just wave 2 folks. Bonds have been going down for almost 3+ years … a 6 month to a year bounce – CERTAINLY in the cards.
So, I’m going to keep my TBT position ON as I’m going to ride all the waves (like UNG, cough cough – what the heck, why ain’t that thing moving …?) but I’ll be a BUYer of TLT for this bounce.
Why not? Nice bullish divergence on the weekly and monthly w/ some good targets. So, guess we’ll see.
NOTE: it’s getting pretty squirrelly out there … I’m pretty confident in these levels on the 30 year continuous chart. VERY in fact – one of them will stop this free fall. If they don’t, and the bonds fall right thru these levels – I’ll be shocked and awed. LOL … no kidding, the Bond market in a free fall is really an “other” on the good/other scale.
IF my count is right … (remember, my Elliott abilities are like my golf game 😉 then we have started another move down in bond prices but I do believe this is the 5th and final wave of just the first wave down … that being said, w/ all of the “noise” and “sentiment” w/in the market about “inflation under contorl” and the “Fed is going to Ease” and “blah blah blah” I believe this is a countertrend opportunity which could bounce PRETTY BIG just based on sentiment, alone.
For now, I have the 82-85 region as the first target to end Wave 1 down … multiple confirming but non-correlated techniques are showing this to be a very important zone.
I am long TBT (inverse of TLT) and plan on keeping that position open but will also go LONG TLT and have both a long TLT and long TBT position open at the same time. I sense that TBT will be held for YEARS as interest rates are not done for the long term, at least in my VERY humbled opinion.
I like this zone because, a lot of times when the wave 3 is extended you will find wave 5 = wave 1. (FWIW wave 3 was exactly 3 times as long as wave 1 down)
